The objctive of this project is to investigate empirically the impact of price (taxes) and other factors on smoking by adults. Particular attention is paid to accurately measuring the price elasticity of demand, a measure of the responsiveness of cigarette consumption to price changes, in the context of a completely specifed individual demand equation. Included in these demand relationships will be other characteristics of the individual such as health status, age, sex, income and education. There is reason to believe that previous attempts to measure the price elasticity of smoking may have been biased upward because the extralegal transportation of cigarettes (bootlegging) from low to high tax states had not been adequately accounted for in deriving these estimates. We propose to use the rich, but previously unexploited, data on individuals from the U.S. Health and Nutrition Survey (1971-75) combined with information on retail prices to estimate these relationships. Multivariate analysis will be employed, particularly, ordinary least squares regression and its modifications, Tobit and logit regression techniques. In order to more adequately estimate the health impact of cigarette tax changes, we will estimate separate demand relationships for individuals depending on the probable health effect of modifying their cigarette consumption. We will estimate the amount of cigarette bootlegging for each state and construct a model of interstate bootlegging as a function of distance and tax differentials. This research will provide empirical estimates of the potential effects of federal, state and local tax policies on cigarette consumption and ultimately health levels. It will also provide needed information on the effect of state tax changes on bootlegging activity.